Blockchain Technology: All You Need to Know About NFTs
It seems like there are brand new trends in blockchain technology emerging by the day, and it can be challenging to keep up with all these developments. Non-Fungible Tokens (NFTs) are the latest and greatest thing gaining buzz across multiple industries and mainstream media.
What Are Non-Fungible Tokens (NFTs)?
NFTs are blockchain-based assets that cannot be exchanged for any item. For example, one Bitcoin is tradeable for an equivalent sum in Ether, other cryptocurrencies, and any other type of asset. Unlike traditional currency and purchases, NFTs are more like collectibles whose value cannot be measured in traditional cash or any other kind of currency.
The current popularity of NFTs centers around people’s desire to have something that is entirely unique. “Non-fungible” means that these pieces of artwork, music, virtual real estate, domain names, and other objects cannot be replaced with anything else. All NFTs are stored on Ethereum’s blockchain, so you can track every step of the object’s creation, sale, and resale. If you have ownership of an item on a blockchain, you are free to manage and monetize it however you want.
Why Are NFTs Expensive?
The most popular NFTs that have made the mainstream news are incredibly expensive, but that doesn’t mean that every NFT is worth millions or even thousands of dollars. NFTs derive value much like any real-life asset—simple supply and demand states that a cheeseburger is valuable to those who want or need to eat it.
To take this economic theory further, an object is valuable in proportion to how important it is to the specific consumer. This has been the fundamental philosophy for art enthusiasts the world over—to them, an original Pollock is worth millions of dollars because they want it, have the money for it, and most importantly, believe that this piece of art is worth the exorbitant price.
NFTs function similarly. These digital artworks, in-game items, event tickets, albums, virtual real estate, and other objects are very attractive to a specific subset of people; therefore, these NFTs have value. The prices are so high because of the nature of NFTs—they are unique and non-reproducible; therefore, they are worth more.
How Can Ownership of NFTs Be Maintained?
NFTs are intangible objects that can easily be bought and sold. So how do you maintain ownership of a digital item that can be reproduced or pirated outright? Consumers have been stealing digital assets for years, so how can you be sure that your NFT is an original?
The answer is blockchain technology. All NFTs are on Ethereum’s public blockchain. They are tokens with unique IDs that are recorded on the chain, and once they are sold, the transaction cannot be reversed. There is no opportunity to hide or obfuscate the authenticity of the item because every transaction and all identifying details are recorded and publicly available.
NFTs are an important technological development, especially in the art, entertainment, music, and gaming industries. Experts say NFTs can soon cross streams and drive big changes for many businesses and consumers, so it’s worth keeping an eye on future developments. Forward-thinking businesses will soon be able to leverage this technology into high-earning revenue streams.
NFTs are a popular development in blockchain technology, and they are expected to penetrate many industries in the near future. They offer unique ownership and revenue opportunities, and soon, many more brands and businesses can benefit from them.
Technical Paradigm can help you and your business keep up with all future technological developments in your industry. If you are in need of IT solutions, technical services, or even an IT staffing agency in Chicago to take your business to the next level, contact our experts today!